Facing multiple challenges during the U.S. housing downturn, Black & Decker will look to cut costs and expand internationally.
“We realize we have some challenges, but we have potential for great profits,” said Roger Young, vice president of investor relations for Black & Decker, the home-improvement product manufacturer. “We?re better balanced than we?ve been in the past and better prepared to withstand the current downturn.”
Black & Decker?s net earnings in the second quarter of 2007 slipped to $118 million from $152.2 million in the second quarter of 2006 ? a decrease of more than 22 percent.
And the housing market doesn?t look to be improving any time soon.
The number of homes sold in the Baltimore region in August dropped 17 percent from the same month last year, and the average time on the market for a home increased from 58 days to84 days, according to data released last week by Metropolitan Regional Information Systems.
The answer for Black & Decker appears to be selling outside the United States. International sales for Black & Decker totaled 19 percent of total revenue in 2001 and increased to 30 percent of total revenue in 2006, Young said.
“We are seeking growth in areas of the world that are growing rapidly,” Young said.
While the company?s U.S. sales declined by 7 percent in the first half of the year, sales in Latin America increased 24 percent and sales in Europe increased 14 percent.
“Despite the near-term speed bumps the firm is facing, we continue to believe Black & Decker?s strong brand name and innovative product lines will deliver solid returns to shareholders over the long term,” John Kearney, a Black & Decker analyst for Morningstar, a Chicago-based investment research firm, wrote in a recent report on the company.
“There?s no question that the housing downturn will create some headwinds for Black & Decker,” Kearney wrote. “Over the long-term though, we believe Black & Decker?s lower-cost structure, new product development and strong brand portfolio can continue to deliver healthy returns to shareholders.”
